In February 2015, the Financial Markets Law Committee (FMLC) published a Discussion Paper, Coordination in the Reform of International Financial Regulation, which considered the challenges the G20 has faced in implementing the core recommendations adopted in Pittsburgh in 2009 for strengthening global financial stability.
The Discussion Paper noted that while significant progress has been made, a large degree of fragmentation across jurisdictions has occurred, resulting in legal uncertainty in the conduct of cross-border financial activity. The Discussion Paper outlined various solutions to address this fragmentation and resulting issues of legal uncertainty.
The FMLC has now published an interim feedback statement which summarises the feedback received to its Discussion Paper. The FMLC notes that several common themes emerged from the feedback it received, including the:
- reality of the political and legislative backdrop against which the G20 operates and the diverse nature of each jurisdiction. For example, solutions to address the lack of international coordination cannot be crafted in a vacuum but must be designed with the realities of the context in which they will operate in mind. The FMLC notes that a related theme in many responses is how to reconcile a perceived rift between the national and international levels, namely the reluctance on the part of national jurisdictions to cede power to international bodies whose democratic legitimacy they may question; and
- roles of the International Organization of Securities Commissions and the Financial Stability Board (FSB). The FMLC notes that participants were conflicted, on the one hand participants were open to giving these bodies enhanced roles, while at the same time conscious of inherent limitations, such as political will, the legitimate scope of their mandates, the need for due process and deficiencies in their representation.
The FMLC notes that the two most popular solutions were: (i) the development of an international framework on mutual recognition and formalising early multilateral discussion and consultation among regulators and standard-setters; and (ii) the development of additional multilateral memoranda of understanding between regulators, the establishment of dispute resolution procedures, broadening the powers of the FSB to oversee implementation of the G20 commitments and equipping the G20 with a permanent Secretariat.